As an MSP, the cloud provider you choose is critical to your business’s success and customers’ satisfaction. While AWS, with its extensive global infrastructure and broad service offerings, seems like the choice for hosting customer infrastructure, it’s important to consider that ‘AWS is killing your MSP profit.’
Is AWS truly the best choice for your MSP?
Let’s dive in and shed some light on how AWS could be harmful to your MSP’s profitability, based on our personal experiences we’ve gathered about the hidden costs and challenges associated with AWS.
The Hidden Costs of AWS for MSPs
The appeal of AWS is undeniable, but as many MSPs have discovered, it comes with challenges that can undercut your business model. Here are four reasons why sticking with AWS is killing your MSP profit:
1. The Proprietary Environment Hurdle
AWS’s proprietary platform presents a significant challenge, especially for MSPs who constantly adapt to its intricacies. When we were an MSP, this meant dedicating significant resources to training and development, as AWS’s platform constantly changing. This need for specialized knowledge not only limited our ability to quickly onboard new technicians, but also narrowed our hiring pool to those already proficient in AWS or those for whom we could afford extensive training.
While AWS does offer a more standardized alternative, the costs associated with it were excessive, rendering it an impractical solution for our needs. This requirement for specific AWS expertise often meant higher operational costs and a slower pace in adapting to new AWS features and services.
2. Unpredictable Cost Structure
Dealing with AWS’s unpredictable pricing, especially regarding data transfer fees, is a major challenge. The variable ingress and egress charges led to significant and unpredictable fluctuations in our monthly expenses, complicating our billing process. This unpredictability forced us into a dilemma: we had to either overcharge our clients to buffer against potential spikes in costs or adopt a retrospective billing approach.
Both options had negative implications – overcharging could lead to client dissatisfaction, while retrospective billing could affect our cash flow and necessitate additional administrative resources for managing billing reconciliations. This aspect of AWS not only strained our financial planning. but also added layers of complexity to our client billing processes.
3. A Global Focus That Overlooks MSPs
AWS, with its global focus, primarily caters to the needs of large enterprises like Fortune 500 companies, often overlooking the unique requirements of MSPs. This misalignment was evident in our interactions with them, particularly regarding support. With many of their data centers and support operations located outside the United States, we frequently encountered challenges in obtaining timely and effective assistance.
The lack of tailored support and sluggish response times left us in difficult positions during critical operational periods, highlighting the gap between AWS’s service offerings and the needs of MSPs like ours.
4. Complex and Confusing Pricing Models
The complexity of AWS’s pricing structure is a considerable hurdle. Its intricacy often rivals that of other major cloud service providers such as Azure. For MSPs, accurately predicting the cost of deploying and maintaining client environments on AWS can be so daunting that many, including us, had to resort to using intermediaries such as PAX8.
These intermediaries helped navigate the convoluted pricing models, but at the cost of introducing an additional layer of management and expense. This complexity in pricing made financial planning more challenging and added a barrier to efficient operations and profitability, as it required dedicating resources to understanding and managing the costs associated with AWS services.
Paving the Way for MSP Success Without AWS
Our experience showed us that breaking through to higher tiers of Monthly Recurring Revenue (MRR) with cloud services was only possible once we moved away from AWS. We encountered similar hurdles with Azure, which I discuss in our blog, “Why Azure is Killing Your MSP Profits.”
For MSPs seeking growth and stability, exploring cloud providers that offer predictable pricing, dedicated MSP support, and simpler management tools can be a game-changer. Our journey taught us to look beyond the giants of the cloud industry to find solutions that aligned better with our business model and customer service.
Check out our Cloud Academy for complementary resources and guidance tailored for MSPs looking to boost their MRR by offering the cloud.